The real estate brothers warned about the future of homeownership on CNBC’s “Your Money” event last Thursday. Jonathan Scott, one half of the HGTV duo, predicted that within 20 years young people will be completely priced out of the housing market.
The main problem stems from the ongoing housing shortage, which Drew Scott identified as the most important factor impacting today’s market. “I don’t think people understand that the housing shortage impacts everything from housing shortage issues to the cost of housing,” Jonathan Scott told CNBC.
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Current market data supports their concerns. The National Association of Realtors reports a shortage of 4 million homes nationwide, and the median sales price in the second quarter of this year was $412,300, according to data from the Federal Reserve Board. Reached.
The situation is further complicated by the growing disconnect between buyer expectations and market reality. More than half of prospective buyers are waiting for mortgage rates to drop to 5.5%, while the current 30-year fixed mortgage rate is 6.54%, according to Freddie Mac.
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The gap pushed existing home sales to their lowest level since October 2010, with sales in September falling at an annual rate of 3.84 million units.
Although down from its peak of $442,600 in late 2022, affordability remains a major hurdle for potential buyers.
The financial impact was particularly severe for new buyers, with market share falling to 26% in September, the lowest level on record. At current interest rates, a $400,000 home with a 20% down payment would require monthly mortgage payments of $2,031, said Jessica Lautz, NAR’s deputy chief economist.
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However, some positive indicators are emerging. Single-family housing starts rose 2.7% to 1.027 million units in September, according to U.S. Census data. The market is also seeing more sellers listing their properties as homeowners overcome the “lock-in effect” caused by low mortgage rates during the pandemic.
Despite the challenges, the Scott brothers maintain that homeownership remains a sound investment. U.S. homeowners with mortgages held more than $17.6 trillion in equity as of the second quarter of this year, an 8% increase from a year ago, according to CoreLogic data cited by CNBC. There is.
The brothers offer a different approach for those struggling to enter the market. Jonathan Scott said: “We need to think long-term,” and potential buyers may consider buying a property with family or friends to overcome affordability barriers. he added.
Still, current housing cost trends, combined with persistent undersupply, paint a worrying picture for future generations of potential homeowners.
Unless there are significant changes in the supply and accessibility of housing, the Scott brothers’ prediction that young buyers will be outbid may come true.
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